Authors
Mark C. Lewis and Isabelle Curien
2008 ETS emissions data confirms the key role of generators to prices. ETS data shows generators are very short but all the other sectors combined long. Having revised down their 2009 emissions forecast by a further 50Mt to reflect the continuing weak macro outlook Deutsche Bank considers EUAs will only really start to reflect fundamentals when generators' Phase-3 compliance buying begins in earnest: forecast mid-to-late 2010. Meanwhile EUAs could show a slow upwards trend over the next 12 months to €16-18/t and the EUA/CER price spread widen and increase in volatility in the short-term, with particular sensitivity to oil prices.